That improvement in orders pushed the PMI's export index to its highest level in five years.

Employment levels in manufacturing firms also grew in January for the third month in a row, dragging the overall employment index into growth for the first time in 14 months.

One in five firms reported a rise in output in January, and one in four said they had received more new orders than the month before.

Ulster Bank chief economist Richard Ramsey said: "The first PMI survey of the New Year has proven to be one of the most positive in quite some time.

"Granted, the overall level of business activity failed to rise above the 50 mark, which is the threshold for expansion and contraction.

"This signals that the number of firms experiencing growth is still being outnumbered by those reporting falling activity levels.

"Nevertheless, a number of firms and sectors were in expansion mode last month." The survey said: "Private sector employment in Northern Ireland rose in January, ending a 13-month sequence of job shedding.

"Some panellists reported that extra staff had been taken on in anticipation of new business in 2013.

"The overall rise in employment was driven by the manufacturing sector."

Overall, the private sector in Northern Ireland is still shrinking – but rates of decline in both activity and new business slowed down, the survey of business managers found.

And while manufacturing was giving cause for cheer, sectors like construction and services – which rely on the domestic economy and consumer demand – were doing less well.

But the pace of decline in output, new orders and employment for services and construction had slowed down.

Mr Ramsey said: "Input cost inflation remains a cause for concern with both services and construction firms reporting a marked acceleration in January.

"At the same time, construction and service sector firms are continuing to report falling prices for their goods and services. As a result, the squeeze on profit margins for many firms remains intense."

However, Northern Ireland was still the sick man of the United Kingdom, with the fall in activity in the province contrasting with an increase across the UK as a whole.

Belfast Telegraph

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